Three Reasons CFOs Should Push International Business Expansion

Expanding strategically to a cost-effective location can help your company achieve financial resilience while still meeting your other business goals.

With a strategic business expansion, you can tap into tax incentives, lower your operating costs and receive a higher return on investments. You can overcome currency fluctuations and changing market conditions. If you need to boost your financial future, a strategic business expansion can set you up for success for years to come.

Here are three financial advantages of strategic business expansion:

1. Cost-effective operations

You can reduce your overhead by expanding to a city with lower operating costs and fewer expenditures. Business expansion can lower salaries, real estate costs and more. This allows you to invest in other areas of your business, such as research and product development, while spending less time worrying about your bottom line.

What Waterloo offers:

• Waterloo region’s operating costs are 20–30% lower than comparable US tech hubs
• Best value for cost and quality when it comes to tech talent, according to CBRE
• Businesses can save up to 54% by choosing Waterloo for office space, in comparison to major markets like San Francisco, New York and Boston
• Ontario businesses spend 51% less on healthcare costs than businesses in the U.S., with Canada’s affordable and accessible health services

2. Business tax benefits

Rent and salaries usually loom large in conversations about finances, but business taxes (corporate, payroll and sales tax) are important to your financial expansion strategy, too.

By expanding to a new location, you can tap into tax benefits. Identifying jurisdictions that tax you the least can help minimize your business expenses and reduce your cash burden.

What Waterloo offers:

• Corporate tax is lower in Canada than it is in the United States; in Waterloo, the corporate tax rate for non-manufacturing companies is 26.5%, whereas it’s 28.25% in New York and 29.84% in San Francisco
• For manufacturing corporations, Waterloo’s corporate tax rate is even lower at 25%
• In the Waterloo area, payroll taxes are 21% lower than in Boston or San Francisco and 24% lower than in New York City
• For example, an employee making $75,000 USD in Waterloo region would require $1,513.62 less in payroll tax each year, in comparison to the exact same employee in New York

3. Access to funding and grants

A strategic expansion can help you achieve your financial objectives by taking advantage of government funding and grants. These types of programs are instrumental in building and scaling your company. They help you reduce business expenses, such as rent and taxes, and offset costs for talent attraction and R&D innovation.

Federal, provincial and municipal programs can save you money on research and development (R&D), talent, capital expenses, innovation and more. You just have to know where to look.

What Waterloo offers:

• Scientific Research & Experimental Development (SR&ED) can help companies save up to 35% of eligible R&D costs
• Co-operative Education Tax Credit offers 25% – 30% of eligible expenditures, up to $3,000 ($2,190 USD) per student, to help businesses hire bright young talent from top-rated schools in Ontario
• Canadian International Innovation Program helps companies recoup up to 50% of the costs associated with the commercialization of innovation, including development, adaption and validation of technology
• Ontario Made Manufacturing Investment Tax Credit is a 10% refundable Corporate Income Tax credit for companies on manufacturing investments in buildings, machinery and equipment
• Clean Technology Manufacturing (CTM) Tax Credit is a 30% refundable tax credit for new machinery and equipment that manufactures clean technologies (solar, wind, batteries and EVs) or processes critical minerals, and can be received by companies regardless of taxable income
• Ontario Business Research Institute Tax Credit saves companies 20% of the costs paid for scientific research and experimental development, up to a maximum of $4 million per tax year

Click here for a comprehensive list of tax credits, grants, loans and rebates for companies located in Ontario and Canada.

What Waterloo offered: Success stories

Waterloo region is a hotspot for business investment, thanks to numerous cost advantages. These companies earned returns with expansions to Waterloo, tapping into financial incentives, tax benefits, funding programs and more.

• Dana (Cambridge): Dana, a leader in Waterloo’s automotive industry, announced a $60M investment backed with a $2.5M grant from Invest Ontario to grow Waterloo’s zero-emission vehicle manufacturing capacity.
• Novocol Pharma (Cambridge): A leader in health innovation, Novocol Pharma accessed “great government programs to support everything from new technology to capacity-building” (Atif Zia, COO of Septodont and President of Novocol Pharma) in Canada.
• Mirsee Robots (Cambridge): Specializing in high-performance humanoid robots, Mirsee Robotics Inc received a $500,000 award from the Department of National Defence (DND) to develop tele-operated, high-immersion robots for hazardous jobs.
• Keysight Technologies (Waterloo): Keysight, a local quantum innovator, found cost advantages in Waterloo. Joseph Emerson, Head of Quantum Strategy, said, “My investors can’t believe that we have such a nice space at such a reasonable cost.”

You can access financial incentives, tax benefits and funding programs by expanding to a new strategic location. If you need to cut operating costs and talent expenses, an expansion might be the answer.